Work Un-happiness

WORK MAKES YOU UNHAPPY

The act of working, as opposed to the earnings derived from it, makes people less happy. That is the main claim of research in Germany by Christian Bayer and Falko Juessen, presented at the Royal Economic Society’s 2013 annual conference. The results run counter to previous studies arguing that work itself makes people happy. The authors say:

‘We found the labour-is-pleasure result hard to believe. Having in mind all the people who struggle to get up early in the morning from Monday to Friday, sweat in factories and stress in offices, we could not believe that – as a general result – working per se should make you happy, over and above the income it generates for you’.

The authors suggest that much of the happiness associated with working is more accurately described as happiness associated with income. Previous studies have suggested that if a person loses their job of €30,000 a year and must live on benefits of €5,000 a year and their happiness falls by the amount one would expect from a fall in income of €27,000, then there must be some happiness gained from working.

This new study argues instead that researchers often misinterpret the effect of unemployment benefits, which are temporary, whereas income from a job is seen as permanent. So, much of the unhappiness comes from people recognising that their permanent income will be lower. The authors conclude:

‘Fixing this problem makes the happiness literature compatible with standard economic reasoning again: People suffer from a ‘disutility’ of work and, for the happiness-income relationship, the persistence of income changes (short-run or long-run) matters a lot.

‘This may seem obvious but from a naive reading of previous happiness research, these results seem counter factual’.

More…

Won’t you agree: leisure is fun but working is not. Of course, working provides you with labour income and all of us like to go shopping. But apart from this, you hate working. Sounds obvious. Yet, since we are economists, we do love numbers, and we would love to have numbers for the relationship between happiness, income and employment. Indeed, there are plenty of them in the literature.

But looking at these numbers, you may stop short. Previous studies find exactly the opposite relation: working per se makes you happy! This is a challenging result for mainstream economics and to rationalise, these findings many economists resorted to one or another psychological story.

We found this pleasure-is-pleasure result hard to believe. Having in mind all the people who are struggled to get up early in the morning from Monday to Friday, heat and sweat in factories and stress in offices, we really could not believe that – as a general result – working per se should make you happy, over and above the income it generates for you.

We re-open this debate and obtain new findings for Germany. Here is our main result: Working per se rather makes you unhappy! Previous studies that arrived at the opposite conclusion suffered from some methodological problems that we highlight.

Here are some details on these problems: Instead of lumping together all kinds of income and employment fluctuations, one has to discriminate between the effects of income fluctuations that are short-lived and those that last longer. What does this have to do with correctly isolating the effect of employment on happiness? Here is an example to understand this.

Consider a person who moves from employment to non-employment. The drop in labour income is unfortunately a long-lasting issue – as long as the person finds a new job again. Part of the drop in income is alleviated through temporary unemployment benefits. But since these are limited to, say, one year or so, this gain in income is only temporary.

Here is our story: If the permanent income change (from becoming jobless) decreases happiness more than the transitory income change (from unemployment benefits) increases it, the overall drop in happiness will be stronger than what the drop in income per se suggests. This has erroneously led previous studies to conclude that this loss in happiness comes from giving up employment, but it comes from the different income composition associated with employment change.

Fixing this problem makes the happiness literature compatible with standard economic reasoning again: people suffer from a ‘disutility’ of work, and for the happiness-income relationship, the persistence of income changes (short-run or long-run) matters a lot. This may seem obvious for a macroeconomic theorist, but from a naive reading of previous happiness literature, these results seemed counter-factual.

ENDS


Contact:

Christian Bayer: +49 179 9759788, +49-228-73 4073 (christian.bayer@uni-bonn.de)

RES media consultant Romesh Vaitilingam:
+44 (0) 7768 661095
romesh@vaitilingam.com
@econromesh

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